A new gene has been discovered as an open reading frame (ORF) encoded within the long terminal redundancy (LTR) of mouse mammary tumor virus (MMTV). The ORF is also maintained within the 3' LTR of an MMTV endogenous genome (unit II). Polypeptides specific to this sequence have been synthesized in bacteria using molecular clones of MMTV and bacterial expression plasmids. Previously undetected transcripts expressed from the MMTV genome have been identified in MMTV-transformed cells and MMTV-induced tumors; included is a 2.5 kb transcript that is regulated independently from the classical 35s and env messages. Molecular chimeras between MMTV regulatory sequences and heterologous genes (p21 transformation gene from Ha-MuSV) have been constructed. Two classes of transfectants produced with these constructions have been identified. In one class, the expression of the p21 transformation function is not hormonally regulated, and apparently derives from a non-MMTV cellular promotion sequence. In the second class, the level of p21 protein is under glucocorticoid regulation.